Chinese Economics Thread

[Stierlitz]

The official NBS Manufacturing PMI declined to 51.9 in March of 2023 from February's near 11-year high of 52.6 but above market estimates of 51.5. The latest figure pointed to the third straight month of expansion in factory activity, supported by the lifting of remaining pandemic restrictions late last year. Output 54.6 vs 56.7 in February, new orders (53.6 vs 54.1), and export sales (50.4 vs 52.4) all rose at softer paces while buying activity stayed strong (at 53.5). At the same time, employment fell after growing previously (49.7 vs 50.2), with delivery time easing slightly (50.8 vs 52.0). On the price front, input cost rose the least in three months, rising for the 7th month in a row (50.9 vs 54.4); while output charges fell after rising for the first time in 10 months in February (48.6 vs 51.2). Finally, business sentiment remained upbeat despite the reading hitting its lowest in three months (55 vs 57.5).​

The official NBS Non-Manufacturing PMI for China climbed to 58.2 in March 2023 from 56.3 a month earlier, pointing to the highest reading since May 2011, boosted by the removal of a zero-COVID policy, alongside the effects of local government's measures to promote consumption and the willingness from households to spend and travel in warm weather. The latest result also marked the third straight month of expansion in the service sector, with new orders rising for the third successive month and at a faster rate (57.3 vs 55.8 in February). Meantime, both foreign sales (48.1 vs 51.9) and employment (49.2 vs 50.2) declined after rising in the prior month. Also, the delivery time index dropped after hitting a high level previously (52.4 vs 55.2). On inflation, input cost rose the least in three months (50.3 vs 51.1) while output prices (47.8 vs 50.8). Lastly, sentiment stayed upbeat, despite the figure softening slightly (63.3 vs 64.9). ​

The NBS Composite PMI Output Index in China rose to a new record peak of 57.0 in March 2023 from 56.4 in the previous month. The robust reading was boosted by Beijing's decision in December to lift all COVID restrictions. Factory activity continued its robust growth while the service sector grew at the fastest pace in nearly 12 years. “In March, the Chinese economy continued its upward trend in the higher booming range, which indicates that the overall production and operation of China’s enterprises continues to improve,” said NBS statistician Zhao Qinghe. Recently, Premier Li Qiang stated that a recovery momentum in the Chinese economy was building with his cabinet trying to address systemic risks to ensure a steady financial market. He added that conditions in March have been even better than the first two months of the year as indicators like consumption and investment had become better, while job market and consumer prices remained stable.​

source: National Bureau of Statistics of China​

 

[siegecrossbow]

The official NBS Manufacturing PMI declined to 51.9 in March of 2023 from February's near 11-year high of 52.6 but above market estimates of 51.5. The latest figure pointed to the third straight month of expansion in factory activity, supported by the lifting of remaining pandemic restrictions late last year. Output 54.6 vs 56.7 in February, new orders (53.6 vs 54.1), and export sales (50.4 vs 52.4) all rose at softer paces while buying activity stayed strong (at 53.5). At the same time, employment fell after growing previously (49.7 vs 50.2), with delivery time easing slightly (50.8 vs 52.0). On the price front, input cost rose the least in three months, rising for the 7th month in a row (50.9 vs 54.4); while output charges fell after rising for the first time in 10 months in February (48.6 vs 51.2). Finally, business sentiment remained upbeat despite the reading hitting its lowest in three months (55 vs 57.5).​

The official NBS Non-Manufacturing PMI for China climbed to 58.2 in March 2023 from 56.3 a month earlier, pointing to the highest reading since May 2011, boosted by the removal of a zero-COVID policy, alongside the effects of local government's measures to promote consumption and the willingness from households to spend and travel in warm weather. The latest result also marked the third straight month of expansion in the service sector, with new orders rising for the third successive month and at a faster rate (57.3 vs 55.8 in February). Meantime, both foreign sales (48.1 vs 51.9) and employment (49.2 vs 50.2) declined after rising in the prior month. Also, the delivery time index dropped after hitting a high level previously (52.4 vs 55.2). On inflation, input cost rose the least in three months (50.3 vs 51.1) while output prices (47.8 vs 50.8). Lastly, sentiment stayed upbeat, despite the figure softening slightly (63.3 vs 64.9). ​

The NBS Composite PMI Output Index in China rose to a new record peak of 57.0 in March 2023 from 56.4 in the previous month. The robust reading was boosted by Beijing's decision in December to lift all COVID restrictions. Factory activity continued its robust growth while the service sector grew at the fastest pace in nearly 12 years. “In March, the Chinese economy continued its upward trend in the higher booming range, which indicates that the overall production and operation of China’s enterprises continues to improve,” said NBS statistician Zhao Qinghe. Recently, Premier Li Qiang stated that a recovery momentum in the Chinese economy was building with his cabinet trying to address systemic risks to ensure a steady financial market. He added that conditions in March have been even better than the first two months of the year as indicators like consumption and investment had become better, while job market and consumer prices remained stable.​

source: National Bureau of Statistics of China​

Decline in manufacturing is to be expected though because exports are gonna take a hit from the ongoing financial crisis. The real problem is getting people to spend money within China during these trying times. No one is willing to spend on big items like house and cars because who knows when and how bad things are gonna get.

 

[Overbom]

Decline in manufacturing is to be expected though because exports are gonna take a hit from the ongoing financial crisis. The real problem is getting people to spend money within China during these trying times. No one is willing to spend on big items like house and cars because who knows when and how bad things are gonna get.

We should minimise demand from the West. Any expansion of imports from those countries might help the West in these (long may they continue) difficult times when we should be aiming to do the exact opposite, push them into the abyss

 

[tamsen_ikard]

Decline in manufacturing is to be expected though because exports are gonna take a hit from the ongoing financial crisis. The real problem is getting people to spend money within China during these trying times. No one is willing to spend on big items like house and cars because who knows when and how bad things are gonna get.

Consumption will resume automatically when people feel the need for it and they are no longer reeling in terms of loss of jobs or income. That will happen the Chinese govt starts to loosen up the taps of monetary and fiscal stimulus with investments in infrastructure and strategic sectors like semiconductors. People always feel the need for consumption. Its inevitable.

The biggest problem facing China now is loosen up and provide stimulus in such a way that it doesn't lead to resumption of property and tech bubbles like 2021. It needs delicate and careful management.

 

[Overbom]

Bloomberg China had a guest today who estimated that Q1 2023 GDP YoY growth for China would have a big jump given the recently released PMI data and the base effects from last year

 

[Reclaimer]

Australia’s assistant minister for trade, Tim Ayres, announces that Australian and Chinese officials will hold critical trade negotiations in China next week. He mentioned wine and lobsters exports.

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[Chevalier]

Australia’s assistant minister for trade, Tim Ayres, announces that Australian and Chinese officials will hold critical trade negotiations in China next week. He mentioned wine and lobsters exports.

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I hope China stands firm; first of all, anglos cant think they can change a government and expect to get a favored result after the previous error was made and that previous error was when ScoMo's government mooted 'weapons inspectors' like teams for China after the COVID outbreak.
Secondly, i quite enjoy cheap lobsters here in australia, so that trade barrier can stay for all i care.

 

[Lethe]

I hope China stands firm; first of all, anglos cant think they can change a government and expect to get a favored result after the previous error was made and that previous error was when ScoMo's government mooted 'weapons inspectors' like teams for China after the COVID outbreak.
Secondly, i quite enjoy cheap lobsters here in australia, so that trade barrier can stay for all i care.

Beijing's economic sanctions against Australia have failed to produce any useful results, partly because Beijing is evidently unwilling to inflict serious costs on itself by restricting Australian iron ore, but mostly for the same predictable reasons that Washington's sanctions against any number of countries also typically fail to produce useful results. Recognising failed policies and being willing to move beyond them is the mark of an intelligent, pragmatic government. As things stand, Canberra wants something from Beijing, and Beijing will want certain things in return.

I suspect that one of the things Beijing will want is guarantees that vehicle exports to Australia (currently we are something like China's fifth- or sixth-largest vehicle export market, with considerable potential for future growth) will not fall victim to the full-spectrum economic warfare campaign that Washington is pushing its allies to adopt.

 

[B.I.B.]

Beijing's economic sanctions against Australia have failed to produce any useful results, partly because Beijing is evidently unwilling to inflict serious costs on itself by restricting Australian iron ore, but mostly for the same predictable reasons that Washington's sanctions against any number of countries also typically fail to produce useful results. Recognising failed policies and being willing to move beyond them is the mark of an intelligent, pragmatic government. As things stand, Canberra wants something from Beijing, and Beijing will want certain things in return.

I suspect that one of the things Beijing will want is guarantees that vehicle exports to Australia (currently we are something like China's fifth- or sixth-largest vehicle export market, with considerable potential for future growth) will not fall victim to the full-spectrum economic warfare campaign that Washington is pushing its allies to adopt.

Could we see a shortage of EVs for export after chinas ban the making of ICE cars later this year?

 

[Reclaimer]

Beijing's economic sanctions against Australia have failed to produce any useful results, partly because Beijing is evidently unwilling to inflict serious costs on itself by restricting Australian iron ore, but mostly for the same predictable reasons that Washington's sanctions against any number of countries also typically fail to produce useful results. Recognising failed policies and being willing to move beyond them is the mark of an intelligent, pragmatic government. As things stand, Canberra wants something from Beijing, and Beijing will want certain things in return.

I suspect that one of the things Beijing will want is guarantees that vehicle exports to Australia (currently we are something like China's fifth- or sixth-largest vehicle export market, with considerable potential for future growth) will not fall victim to the full-spectrum economic warfare campaign that Washington is pushing its allies to adopt.

I wouldn't call the tariffs a "failed policy". It was a necessary response to the previous administration's surprising hostility towards a long time trading partner. Critical Australian imports began to be seen as vulnerabilities, and the tariffs signaled Chinese customers to look for potential alternatives. Was it an overreaction? Maybe. Australian imports are still preferred as you've pointed it out.

Personally I would like an end to the finger-pointing and a return to pre-2018 relations, so I'm hoping for a positive outcome to the meeting.